OBBBA Updates: IRS Restores 1099-K Threshold and Raises 1099-NEC Limits

The One Big Beautiful Bill Act (OBBBA), signed into law this July, includes key updates to IRS 1099 reporting rules that impact gig workers, small businesses, and anyone using platforms like PayPal, Venmo, or Cash App for business transactions.

Here’s what you need to know:

1. 1099-K Threshold Restored to $20,000/200 Transactions

The IRS will no longer require third-party payment apps to issue a Form 1099-K unless you have over $20,000 in payments and more than 200 transactions in a year. This replaces the previously proposed $600 threshold.

2. New $2,000 Threshold for 1099-NEC and 1099-MISC

For payments made after 2025, businesses must issue Forms 1099-NEC or 1099-MISC only when payments total $2,000 or more per recipient, up from the long-standing $600 rule. The new limit will adjust for inflation beginning in 2027.

As we head into January 2026, a 1099-NEC or MISC will need to be filed for vendors whom you paid $600 or more during calendar year 2025. In January 2027 an NEC or MISC will need to be filed for vendors whom you paid $2,000 or more during calendar year 2026.

This change should result in fewer 1099s and less confusion overall, but the responsibility to report income remains the same. Now’s a great time to review your payment processes and recordkeeping practices heading into 2026.